About using Microsoft Dynamics NAV in construction business

Tag Archives: Enterprise resource planning

What is a main difference between using Output Order and Job & Position Journals?

As I wrote in my first post for this theme, we can post the operational work on next ways:

Using ‘Output Order’ – posting of Construction Position output work and Resource and Item consumption per Project in the same time;

Using ‘Position Journal’ – posting only Construction Position output work per Project; we need to post consumption separately;

Using ‘Job Journal’ (standard NAV functionality with some specific customizations) – posting only Resource and Item consumption per Project; we need to post output separately;

Advantage of the first method is that we can post all entries with the one document. We get posted document with ‘Navigate’ functionality. Also, this method enables us to have complete statistic of cost per every Construction Position for each Project.

As we look up in Construction Position Statistic for position posted using Output Orders, we can see Using (position cost), Sales (position revenue) and Profit:

On previous picture we see position cost for each period.

In previous example, I presented Construction Position Statistic from NAV, and this is shown only costs, revenue and profit, without analytics. Also, if we use Output Orders for posting, we can make deeper analysis with complete analytics of resources and items cost or quantities, as picture bellow (from BI4CONS):

Failing of this method is that if we have many complex position works per day, it is too complicated to make evidence and post it.

If we choose posting without ‘Output Order’, we get simply procedure for posting. We use ‘Position Journal’ for evidence of work per all Construction Position we have and separately we use ‘Job Journal’ for evidence of consumption all Items and Resources, not linked with Construction Positions. On this way we get simpler method, but we lose connection of consumption with Construction Position output. Using this method of posting, we know revenue for each position on project, but we don’t know position cost and profit. We could know cost and profit only per complete project or combination project and project task, and of course we will know this data per required period. As we look up in Construction Position Statistic for position posted using Position and Job Journals, we can see only Using (quantity, not a position cost) and Sales (position revenue):

On previous picture, we cannot see position cost.

Position sales data (previous picture) are the same as when we use Output Orders. But when we try to see profit, we will get a wrong data with 100% margins.

We cannot get all things and we must to decide what method we want. Good thing is that we can choose different method for each project, depend of complexity and project requirement. Good thing is also that we can set filter on Position Statistic and we can see complete data for position posted using Output Order on each project.

Let’s go further. When we finish all calculation in Bill of Quantities, quantity surveyors must to close deal. If quote is accepted and contract is signed, we need to “freeze” our document. We can do that when we change BoQ status to ‘Accepted’. When we confirm document, all changed are not possible any more. Also, on ‘Project Card’ this ‘BoQ No.’ is linked.

Certainly, sometimes we may have needs to change or add some data. If we need to change only contracted quantity or price (sometimes, we can change our price when contract be valid for many periods), we can ‘Reopen’ document. If we increase scope of the project (annexes, claims or something else), we can make new “sub-BoQ” with ‘Scope extending’ command.

Reopen

We can reopen document with ‘Reopen’ command on ribbon. When we start this command, status will be changed to ‘In progress’. Reopening can done only by users with specific rights on ‘User Setup’ page. This is not ‘New’ status and we cannot change all data.

If we try to change some non-changing data, we will get the error message. We can change only quantity, position price and discount fields. For any other changing we must to change scope. These are data what we can usually change in standard contract. When we finish our changing, we can again change status to ‘Accepted’. In this moment, system will automatically start function ‘Adjust Position Price’.

This function can enable changing positions price on next documents/entries:

Position Ledger Entries

Output Orders

Calculations

I will explain all of them documents in posts about operative work in construction management. It is important to know that we can change price in all documents before invoicing. If we make invoice with wrong price, first we need to correct them and after than make it again.

We can use ‘Adjust Position Price’ command manually, as well.

Change Scope

When we make additional work on project, we can make contract annex or just arange new claim. In NAV, we can do that with command ‘Scope extending’ on ribbon of document.

When we start this command, we will get new document with the same document ‘No.’ and ‘Project No.’ as source document, but we can add new ‘Job Task’. We get many documents with the same number, but everyone for each annex or claim. In this document we can define new or old positions with same or different quantities, costs, normatives and prices.

These are very interesting questions. Especially because I am protector of standard NAV implementation with very little customization. So I’ll answer the questions carefully.

Is a standard NAV solution can handle construction business? Of course it can, but how?

First scenario:

Construction Company wants to have financial evidence for all construction projects. They work very little project activity by himself and the most of work doing subcontractors.

NAV can support the most of these activities. You have G/L Entries in NAV and G/L Budget for planning. All subcontractors work, company can post using standard Purchase Orders. If company has some own consumption, it can be posted by Item Journal. For partition on project activities, you can use Dimension “PROJECT” with Dimension Values for each project.

If company eventually has more own works, but don’t have many projects, the same scenario could be implemented. This means that the company does not want a detailed analytics by the project.

Using this scenario, company can know revenue, expense, gain, payables and receivables. If it is enough, you can use standard NAV (BE BRL license – NAV2009; Starter Pack – NAV2013).

Second scenario:

If you have the same model, but you have more projects and more own works but not too much construction position, situation is about the same. You need to use Job and Resources modules, because you need to monitor more items and more own resources (machines or persons) work per each project. All consumption of resources and items you will post using Job Journal. You can eventually use tasks for construction position. If you have subcontractors, you will post that using Purchase Order, but with Job code.

You will have all analysis as in first scenario, but you will have more advanced analysis using own resources statistic using Job Ledger Entry. Also, you will can to make Sales Invoice per jobs, but no as construction certificate. If it is enough, you can use standard NAV (AM BRL license – NAV2009; Extended Pack – NAV2013). But if you want to make calculation of contracting position, you will can this, but using MS Excel :).

Third scenario:

You have many complex projects. You have hundreds or even thousands construction positions per project. You make contract for projects and many annex and claims. You want to make calculation for each construction position or for the position group. You want to use your experience from old projects on own norms. You want to monitor each part of projects… You want automatically made construction documentation and automatic construction certificate/invoice…

Then, you cannot use standard NAV for your business. You have two choice:

Buy some specific construction software and make integration with NAV; I think this is bad solution, because you will not get all ERP functionality (many data you will not have) and the same experience.

We can make more scenarios, but if someone has some question, then ask me.

By starting the project and quote acceptance, we start with work on new project. We need to add few specific characteristics: Contract Status (Accepted), Contract No. and Contract Date. We can add many preconfigured setup field (by the company, or by the project). Also, we have to define Job expected end date as the really end date (if we know that this date will be different of end date by the contract)L.

After that, it is possible to monitor effectively all project tasks. Executed works of mechanization or labor work could be entered for each project. Also, material or finish goods consumption could be added. A number of specific parameters in posting process could be added depending on the construction company. We can post all consumption (resources and/or items) and output (construction positions) by two different models. First model (Output Orders) is precise (monitoring all consumption per each position on date on task on project) but more complex for daily work in NAV. Second model (Project Journal and Position Journal) is more relax for posting, but we cannot get the most precise information. Regardless of posting model, we can add many parameters on each journal line. We can add specific monitoring of each resource (by specific mechanization resource no. and each employee if you want) with what is done (Work Type), how much is worked (Ongoing Quantity – different unit of measure), Stand By Time or Extremely Stagnation Time, Mileage (if this is a vehicle)…

When we have many subcontractors, we can post their invoice using Purchase Invoice or Purchase Order with specific Type – Position. When we post this invoice, we get automatically prepared constructing positions for invoice to investor.

After construction output posting on the end of month, all construction lists (Book of Quantities) for all positions could be created with simple command that can be subsequently corrected by the project supervisor. System has multidimensions controls and prepare this constructing positions for invoice.

After gathering signatures for construction lists by project supervisor, you can easily create invoices/certificates for investors without possibility of errors or data inconsistences (for all construction positions, subcontractors work and re-invoice). If invoice is still not accepted, it is possible to post WIP journal. So we can post income on different date, and we can look income per work period and income per invoice date (e.g. for VAT check).

The user can monitor the subcontractor works on each individual position in the construction process if user does not work complete project alone. The user can monitor the subcontractors in complete collaboration life cycle, monitoring the receipt of offer and selection of the best offered deals and registering and posting complete work of subcontractors. Also, all of these tasks could be easily re-invoiced without repetitive entry typing.

Is NAV good solution for construction? What processes are covered by NAV? What is requirements for implementation?

NAV as most of standard ERP solutions includes standard business processes, as: purchase, sales, inventory, financial, accounting, fixed assets, HRM, warehouse management system, manufacturing etc. These are, first of all, the processes that are repeatable and as I said all ERP solutions cover these areas. For years, NAV was to be found primarily within the Supply Chain Management. On the other hand, there are specific business areas where processes are not repeatable. These are specific types of manufacturing, construction, mechanization management… Although this is a complex area, NAV may cover these requirements, but not only standard solution.

Standard NAV has module Jobs. This module can be used for posting and monitoring construction, but only on the base level. However, this module is designed for work with simple types of projects. It cover base with project and tasks and resource and material consumption, but complex processes as Quantity Surveyor Section, Detail Construction Management, Consumption per each position (can be tousends and tousends), Monthly Construction Reports, Certification and specific type of invoicing is not covered.

But, what is power of NAV? NAV is software, it can be easily customized. We can make specific vertical solution for specific industry as construction. And we made it; we made specific industry vertical colution NAV4Construction as global solution. We designed it in the community with many civil engineers and quantity surveyors and we have already implement this solution in many construction companies.